Regus plunges on momentum warning

Regus, the serviced office provider, took a hammering on the stock market
yesterday after warning a recovery in the UK had "lost some momentum".

By Graham Ruddick

5:45AM BST 19 May 2010

Its shares fell 18.9 – or 17pc – to 94p, wiping almost £200m off the market value of the company and dragging it below £1bn.

Regus Group

Speaking at Regus's annual general meeting, John Matthews, chairman, said: "The UK remains our most difficult region and the early signs of improvement seen in the first quarter have lost some momentum in a fragile market. We are continuing to take measures to achieve an improvement in performance."

Pre-tax profits for Regus almost halved from £149.2m to £86.9m in 2009, but shares in the company soared when the results were unveiled in March as Mark Dixon, chief executive and founder, increased the dividend by a third and revealed ambitious expansion plans.

The company is enjoying improvements in trading in the Americas and Asia Pacific, which were reiterated in yesterday's trading update, but the UK business has been hindered by the fragile economy and the fact Regus is operating a number of older, loss-making sites.

Mr Dixon sparked controversy in the property industry earlier in the year after it was revealed he was seeking to renegotiate rental terms with the landlords on some of Regus's "mature" locations.

Revenues for the period to April 30 came in slightly below the expectations of most analysts at £340.7m.